Toronto G-20: A Small Tax on Financial Transactions Could Create Big Change, CIDSE says.

Center of Concern | Fri, Jun 25, 2010

Source: CIDSE Secretariat

25 June 2010

Toronto G20: A small tax on financial transactions could create big change, CIDSE says

Leaders of G20 countries, meeting in Toronto this weekend, can translate good intentions into concrete action to tackle the global economic crisis by adopting a small tax on financial transactions. According to CIDSE, an international alliance of Catholic development agencies, its revenues should be used to finance development, including and beyond the Millennium Development Goals, and other global challenges such as combating climate change.

Recently, German Chancellor Angela Merkel and French President Nicolas Sarkozy have publicly called on the G20 to support a tax on financial transactions.

"The G20 must adopt a tax on financial transactions to make sure those who created the crisis pay their fair share to resolve it," said Sergio Marelli, Secretary General of Italian CIDSE member FOCSIV, from Toronto.

"It is a smart thing to do as it would generate large sums of money urgently needed for development, while contributing to the stabilisation of the financial system at no extra cost for the tax payer."

At a rate between 0.01% and 0.1% a tax on financial transactions could mobilise between 0.5% and 2.4% of world GDP. It would increase the cost of speculative trading and therefore help to mitigate fluctuations of asset prices in stock markets, of exchange rates and commodity prices.

For a more stable and fair global economic system several other concrete actions need to be taken. The G20 must adopt measures that go further than current initiatives to end tax havens, rightly identified as a priority in 2009, which deprive developing countries of huge amounts of money. It also needs to agree on an international fair and orderly mechanism to deal with sovereign debt crises which hits the poor the hardest.

For a full overview of CIDSE’s recommendations to the G20 read the CIDSE G20 statement here.

Sergio Marelli, Secretary General of FOCSIV is at the G20 in Toronto – M: +39 335 203315

Notes to the editors

CIDSE is an international alliance of Catholic development agencies. Its 16 members from Europe and North America share a common strategy in their efforts to eradicate poverty and establish global justice. CIDSE’s advocacy work covers resources for development; climate justice; food, agriculture and sustainable trade; and business & human rights. The issue of global governance is addressed in all our advocacy work.

CIDSE statement for the G20 in Toronto (25 June 2010)

* CIDSE position paper: International taxes on financial transactions: Responding to global challenges - towards a fairer sharing of costs (November 2009)